Category: Regulation

If Puerto Rico bankruptcy ruling stands, it could devastate municipal borrowing

Mary Pat Campbell

Link: https://www.foxbusiness.com/financials/puerto-rico-bankruptcy-ruling-stands-could-devastate-municipal-borrowing

Excerpt:

In the bankruptcy proceedings of the power utility, Swain sided with borrowers and concluded that special revenue bondholders do not hold a secured claim on current and future net revenues. As The Wall Street Journal explained in March, “A federal judge curbed Puerto Rico bondholders’ rights to the electric revenue generated by its public power utility.”

Furthermore, the ruling stated that the original legal obligation of the borrowers is not the face value of the debt, but rather what the borrower (in this case “PREPA”) can feasibly repay. This ruling raises concerns regarding its broader implications for the municipal bond market. 

Municipal bonds play a pivotal role in financing vital infrastructure projects across America. However, Swain’s decision poses a significant threat to the traditional free-market principles that underpin the structure and security of municipal bonds, particularly special revenue bonds.  

These bonds have provided investors with the assurance of repayment through revenue streams generated by specific projects or utilities. By eroding this sense of security, the ruling fundamentally alters the risk-reward dynamics of municipal bonds, disregarding the principles of free markets and limited-government intervention.  

Consequently, state and local governments may encounter elevated borrowing costs when issuing bonds for necessary public investments, hindering fiscal responsibility and the efficient allocation of resources. 

Author(s): Matthew Whitaker

Publication Date: 5 Sep 2023

Publication Site: Fox Business

Working Enrolled Actuaries

Mary Pat Campbell

Link: https://burypensions.wordpress.com/2023/10/23/working-enrolled-actuaries/

Graphic:

Excerpt:

  • Public and Multiemployer plan actuaries would not be in this listing as there is no actuarial certification for public plans and union plans have their own Schedule MB which I have no incentive to keep track of.
  • ‘One-participant’ plans are not included here since their filings are not publicly available for view so there are far more SBs signed by the small-plan actuarial community. For example, I have 83 SBs signed in 2021 that appear on the DOL website but do another 150 ‘one-participant’ SBs that do not.

Author(s): John Bury

Publication Date: 23 Oct 2023

Publication Site: burypensions

Fired head of Colorado’s public pension system will get a year’s salary — more than $400,000 — as severance

Mary Pat Campbell

Link: https://coloradosun.com/2023/05/17/ron-baker-pera-severance/

Excerpt:

The fired head of Colorado’s $60 billion-plus public pension system will receive a year’s salary — more than $400,000 — as severance, under his contract and because of the way his employment was terminated. 

Ron Baker was fired May 1 by the 16-member Public Employees’ Retirement Association board nearly two months after he went on a leave of absence. 

Neither the board nor PERA has disclosed why Baker was fired, and Colorado Sun attempts over the past several months to contact Baker have been unsuccessful. Emails, texts and voicemail messages to Baker from The Sun, including for this story, were not returned.

Baker will get $412,108.80 in severance because the board terminated his contract without cause. Had he been fired for cause, he wouldn’t have been eligible to collect the severance. 

Baker’s contract says he could only be fired for cause if there was a breach of his employment agreement, for gross negligence, or if he had committed or pleaded guilty or no contest to a felony criminal charge. The contract says he could also be fired for cause for “wilfully engaging in any activity which is contrary to the best interest of the association (for) which activity is uncured by the executive for a reasonable period of time after he receives written notice concerning such activity.”  

Author(s): Jesse Paul

Publication Date: 17 May 2023

Publication Site: Colorado Sun

Ron Baker, the head of Colorado’s public pension system, is fired after two-month leave of absence

Mary Pat Campbell

Link: https://coloradosun.com/2023/05/02/ron-baker-pera-fired/

Graphic:

Excerpt:

Ron Baker, the executive director of Colorado’s Public Employees’ Retirement Association, was fired Monday night by the 16-member board overseeing the state’s $60 billion-plus public pension system. 

Baker’s firing comes nearly two months after he went on a leave of absence. PERA refused to say why Baker went on leave or to say whether his absence was self-initiated or initiated by the PERA board.  

The PERA board convened in downtown Denver on Monday evening for a special meeting to discuss Baker’s employment status. The board immediately voted unanimously to enter a secret executive session, which lasted more than six hours. 

When the board emerged from its closed-door session, Vice Chair Suzanne Kubec made a motion to terminate Baker, which was seconded by Colorado Treasurer Dave Young, who sits on the board. The motion passed unanimously and the meeting adjourned.

….

Baker was appointed to be PERA’s executive director in 2018 and made an annual salary of more than $400,000, In January, the PERA board voted to award Baker a 19% performance bonus and increased his salary by 4%, according to meeting minutes.

Author(s): Jesse Paul

Publication Date: 2 May 2023

Publication Site: Colorado Sun